Financial market research and analysis

With the first public debate between Hillary Clinton and Donald Trump now behind us, it would seem that the markets have given Clinton the nod. The Canadian dollar, Australian dollar, New Zealand dollar, South African rand and Korean won were all amongst the currencies that registered a positive response to the debate, all five having moved from losses before its commencement, to gains in its wake.

However, the real winner has been the Mexican peso, which has been viewed by many as a negatively correlated indicator of Trump's election prospects, and who can blame it considering some of Trump's inflammatory pronouncements regarding his country's southern neighbour as he has blazed his way along the campaign trail. The peso recovered losses of 0.3 percent before the debate, surging to over 2 percent gains at its close, the emerging currency's largest rise in recent months. This despite peso shorts having reached record highs in the run-up to the debate as certain opinion polls placed Clinton and Trump as being tied. Shorting the peso has been the trade of choice for those forecasting a Trump win, with markets pricing-in the possibility of a November victory for the Republican candidate given the recent rise in Trump's popularity.

While Trump has demonstrated a mastery over the media, having managed to keep himself in the spotlight regardless of how off-colour some of his remarks have been thus far, this first face-off between the two candidates was to be the perfect opportunity to see which of the them could back-up their campaign sound bites within the context of a formal debate. If the dynamic of the debate were to be boiled down to a single sentence, it would probably be that Clinton stuck to her campaign statements, whereas Trump's responses were deemed by commentators to often be rambling. This may have made all the difference.

S&P 500 futures also benefited from the encounter, rebounding by 0.6 percent from a 0.3 percent loss. Additionally, the MSCI Asia Pacific Index rallied 0.5 percent, up from losses of almost 1 percent. Elsewhere, safe haven assets fell as Gold registered its first decline in a week, with the Japanese yen taking a 0.4 percent tumble and the US dollar index also dropping by 0.2 percent. The reaction of markets has been characterised as a “sigh of relief” from a political situation that has started to exhibit more than just a few signs of being stranger than fiction.

While markets seem to have decided who bested, many commentators are calling the debate too close to call, especially online where many polls are still showing Trump as being in the lead. It remains to be seen whether Clinton's somewhat canned approach or Trump's circuitous style of address will win the day. Stay tuned, the imminent rematch looms large.